TMC NEWS

TMCNET eNEWSLETTER SIGNUP

New charge in CA fraud case

(Newsday (Melville, NY) (KRT) Via Thomson Dialog NewsEdge) Apr. 25--On the eve of a plea agreement for two top former CA executives, another, past senior vice president Thomas Bennett, was arrested Friday and charged with conspiracy to commit obstruction of justice in the federal accounting-fraud case.

Government papers filed Friday name Bennett for the first time as one of the officials who took part in an alleged bribery and obstruction scheme in which the president of a CA client, Enterprise Management Systems Inc., is accused of taking $3.7 million in payments to buy his silence, prosecutors charged. The contention was first discussed in an amended complaint against former CA chief executive Sanjay Kumar and former executive vice president Stephen Richards last year. Both men were scheduled to face a trial next month, but yesterday Kumar and Richards pleaded guilty to securities fraud and obstruction charges.

In a previously undisclosed element of the case, the government alleges an employee of interBiz, a former CA subsidiary, also demanded and was paid $600,000 to keep quiet about the bribe, which the employee knew of after attending a meeting in Hawaii in 2003. The former interBiz employee was not identified.

Bennett also is accused in the court papers of telephoning a government witness who knew of an alleged attempt by Kumar to reformat a computer hard drive to conceal evidence, saying to the witness, "We're thinking about you." Kumar's attorneys had denied the charge, but court papers said the witness felt "uncomfortable" about Bennett's alleged call, in which Bennett also allegedly asked the witness if he was "looking for a job." Bennett, a longtime confidant of Kumar, is an employee of Kumar's post-CA company, On-Demand Partners.

Michael Ross, a lawyer for Bennett, said his client pleaded not guilty to the charges. "Mr. Bennett is looking forward to having these charges heard in court and his acquittal on these charges," Ross said. Bennett was released on $500,000 bond.

According to the criminal complaint filed Friday, Bennett, who worked at CA until October 2004 as head of business development, orchestrated a "revenue swap" agreement with Enterprise Management Systems (EMS) in 2000. Under the agreement, CA improperly booked $5 million in revenue in March 2000, and $18.5 million in June 2000, according to the government filing, which said the transaction was "devoid of economic substance."

According to court papers, once the government probe of CA had begun, the president of EMS sent e-mails to Kumar "in which he solicited payment from CA to prevent him [the EMS president] from cooperating with the government."

Bennett is described in the court papers as traveling to Hawaii with former CA general counsel Steve Woghin to meet with EMS' president, who was not identified in the complaint. Later, the papers say, Kumar authorized Bennett "to bind CA to pay EMS's president millions of dollars to procure his silence." It says CA entered into a consulting agreement with the EMS official in June 2003, agreeing to pay him $3.7 million, though the official provided "no services."

A spokesman for the U.S. attorney's office in Brooklyn, which has led the case against the former officials, wasn't available yesterday to discuss the Bennett case.

In what may be a coincidence of scheduling, officials of the Securities and Exchange Commission were scheduled to appear in the Brooklyn federal court yesterday to meet with an attorney for Lloyd Silverstein, the former CA finance vice president who was the first to plead guilty and cooperate with prosecutors in the case. According to a court calendar, parties "should be prepared to discuss," among other things, the "prospects for settlement."